This year, the deficit is £44.9bn – up from £35.6bn in the first four months of 2011. This figure excludes one off payments made by the transfer of royal mail pension assets into the public sector – so when you see some people saying the deficit is lower now than last year, don’t fall for it – they can only say this by including this single payment, which disguises the economic reality we are facing.
The deficit is increasing because tax receipts are falling and benefit payments are rising. This is exactly in line with what anti-austerity commentators and economists have been saying since the coalition set out their plans in 2010. How long before the demands for alternative economic policies become too strong for the government to continue?
Corporation tax receipts have fallen by 20% – a huge amount, underlining the precarious state of the private sector, where 2/3rds of companies are saying they will have to lay off staff if the economy doesn’t improve soon.
And benefit payments rose by 7% as increasing unemployment and high inflation push up the cost of social security.
At the same time, interest payments on our increasing debt have also risen.
The Office of National Statistics say this (PDF, page 15):
In 2011/12, the central government accrued current expenditure was £617.0 billion, which was £10.4 billion, or 1.7 per cent, higher than in 2010/11, when central government current expenditure was £606.6 billion.
The rise of £10.4 billion is due to a rise in debt interest payments of £2.6 billion, a rise of net social benefits of £8.3 billion and a fall in other expenditure of £0.4 billion.
Recently, right wing commentators have been claiming that there is no austerity and government spending is rising – this is a sleight of hand trick, as they wilfully ignore the huge drop in investment spending choosing only to consider current account spending which has risen – detailed above, because of austerity.
Those of us who are experiencing government cuts to our services and jobs know that austerity is happening – and now we are seeing that it is failing in its central stated aim.
It is up to us to ensure that they cannot continue to use austerity as a cover to outsourcing the state and dismantling the social safety net we have in place.
As the deficit rises, revealing the central lie of austerity, join us to prevent the coalition dismantling the NHS, destroying our benefit system, outsourcing everything in sight and wrecking our economy in the process.